State bereavement support "opaque and outdated" report finds

31 March 2016

The Work and Pensions Committee's report says the UK Government should follow the lead of the Scottish Government and conduct a broad review of burials, cremations and funerals, with a view to making changes that have a long-term impact on funeral inflation and reduce funeral poverty.

Report findings

The Committee says the approach to support for the children of widowed parents – where the benefit is only paid if the parents were married, not co-habiting or in a civil partnership – is particularly outdated and should be addressed urgently.

The Committee also says evidence it heard regarding publicly funded bereavement support suggests the funeral industry may not be operating in a way that serves bereaved, vulnerable people well. This evidence on the operation of the funeral industry has been passed to the Competition and Markets Authority.

The Social Fund Funeral Payment

In an inquiry propelled by compelling evidence on the personal impact of shortcomings in the system, the Committee found:

The maximum award for other essential funeral costs has been fixed at £700 since 2003. It now does not cover the cost of a simple funeral. Funeral director fees however have risen well above the rate of inflation. DWP should negotiate and agree the reasonable cost of a simple "fair funeral" with the industry and then set the maximum SFFP to reflect this cost.

The application for a SFFP is 23 pages long, with 12 pages of guidance. The payment is strictly only available to people who have no one "close" to the deceased who could pay for the funeral: while completely appropriate, this means that eligibility depends on subjective assessment of interpersonal relationships, before any financial assessments are even made.

An application requires a final bill from the funeral director, i.e. the bereaved must commit to the expense before having any clear idea of what or if payment will be received. Processing time is then longer, or much longer, than the normal or faith-mandated time between death and burial, but some funeral directors refuse to proceed without payment because of the uncertainty in the process.

The Committee heard distressing evidence of one mother who was forced to freeze her son’s body for months while she saved enough to pay for a funeral, and of bereaved people who were denied their relative’s ashes because of a shortfall in the final payment.

The Committee says the process must be simplified and clarified, beginning with the introduction of an eligibility checker and an index of local funeral directors and their comparative costs for a "fair funeral".

Bereavement benefits

Bereavement benefits have always excluded cohabiting couples who are not married or in a civil partnership, even when they have dependent children. The Government specifically omitted the option of extending the benefit to cohabitees from its consultation, despite aiming to modernise the benefit and "improve an out-of-date system".

Bereaved parents face increased expenses because of their responsibility to their children. The needs of bereaved children of cohabiting parents are no different to those whose parents were married or in a civil partnership.

The cost of extending the Bereavement Support Payment to cohabitees with dependent children is low, relative to the overall cost of the system, and the benefit reforms are projected to deliver a medium-term saving. After a recent case in Northern Ireland, the DWP may be forced to reverse its position anyway: the Committee says Government should take positive action now rather than wait for a challenge in the courts.

The financial impact of bereavement will often last much longer than one year or 18 months. DWP should adopt a cost-neutral method of extending the Bereavement Support Payment to 18 months through a reduction in the lump-sum payment.

Through what has been described by DWP as a "technicality" of the interaction between benefits, the poorest Widowed Parents Allowance claimants are set to suffer a net loss under Universal Credit. The Committee says the Department's proposed solution to what must have been an unforeseen consequence is "unworkable and unnecessarily complicated", and does nothing to retain the value of WPA for the poorest claimants. The only logical solution is to exempt them.

Chair's comment

Frank Field MP, Chair of the Committee said:

"We did not set out to inquire into the funeral industry but it soon became apparent that the interaction between an opaque and outdated public system of bereavement support and a market in funeral services which simply does not operate "normally", is causing problems.

We are concerned by the lack of protection in the market for bereaved customers, particularly those on low incomes. They are vulnerable and may not be inclined to shop around. This is not conducive to effective operation of the market."

Rising funeral costs and social fund payments

"What is clear to us is the contrast between social fund payments for funerals, which have not increased since 2003, and the costs of a funeral, which rose on Royal London’s estimate by 3.9% from 2014-15 alone in an environment of almost zero inflation. This means that funeral payments for those who can prove they are entitled– and that is a very and uncertain onerous process – now fall far short of covering even a basic funeral.

We heard clear evidence of the distressing circumstances and debt this is leading people into, at a time when they are grieving and vulnerable. We do not want a return to the spectre of miserable "pauper’s funerals". We urge the Government to conduct a cross-Departmental review of burials, cremations and funerals, with outcomes that will address the factors driving up funeral director fees and work to reduce funeral poverty.

The support for widowed parents is also badly outdated, with benefits denied to cohabiting parents. Penalising a child on the grounds of their parents’ marital status is as unjust as it is anachronistic. The costs involved to right this wrong are small and the Government should do so as soon as possible. "